By Alice Seeley
On June 2, Frontier Airlines announced it would pay Spirit Airlines a $250 million reverse breakup fee “in the unlikely event the combination is not consummated for antitrust reasons.” This is a last-minute attempt to convince Spirit shareholders to vote in favor of Frontier’s bid on June 10 as rival airline JetBlue tries to buy Spirit outright.
“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” said Spirit’s chairman, Mac Gardner.
Spirit’s board of directors rejected JetBlue Airways’ offer of $30 a share and urged Spirit shareholders to vote against the deal since a deal with JetBlue will most likely not be approved by regulators.
JetBlue responded to Frontier’s announcement by increasing its reverse breakup fee by $150 million to $350 million. Under JetBlue’s revised terms, Spirit shareholders would receive $31.50 per share in cash, comprising $30 at deal close and prepayment of $1.50 from a raised reverse breakup fee soon after Spirit shareholders vote to approve a deal.
